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China lures overseas investment for LED fabs

Posted: 30 Apr 2010     Print Version  Bookmark and Share

Keywords:China LED fabs  investment  subsidies 

With the aim of strengthening its position as a major global manufacturer of LEDs, China sets about to attract foreign investment with subsidies and preferential policies. In recent months, as demand exceeds supply, several leading international suppliers have invested in the construction of factories in the Pearl, Yangtze and Minjiang River Delta regions, Bohai Bay Rim Economic Region, and even in some parts of Middle Western China.

"China will become important to the global LED industry this year," said Zheng Haowen, director of the National High-Tech Enterprise Development LED Professional Committee, addressing a seminar at Global Sources' systems design and component sourcing event, IIC-China. "The total foreign investment for the sector is projected to exceed Rs.40, 635 crore ($8.8 billion), a phenomenal increase from about Rs.6, 926 crore ($1.5 billion) in 2009."

To encourage international businesses to set up production facilities in China, local governments have set up policies for subsidizing the cost of construction. The district of Nanhai in Foshan, Guangdong province, for instance has a Rs.674 crore to Rs.1,353 crore ($146 million to $293 million) financial assistance fund. This was set up in October 2009 to support the development of the semiconductor lighting industry in the area.

One result of this endeavour is that US-based SemiLEDs poured Rs.1,616 crore ($350 million) into a new production facility in the district. The factory, Xurui Optoelectronics, will incorporate SemiLEDs' patented vertical LED on metal technology in manufacturing wafers and higher-powered chips. Full-scale operations for the initial stage are projected to start in October 2010, with monthly capacity at 2 crore (20 million) 1x1mm LED chips. But once all three stages of the project are completed in 2013, output per month is expected to reach 38 crore (380 million) units.

Yangzhou in Jiangsu province has a similar policy. The city government is setting aside Rs.1,620.81 crore to Rs.1,690.08 crore ($351 million to $366 million) for subsidizing MOCVD machine procurement. The fund will be available by October 2011. Through this policy, Yangzhou will shoulder Rs.6.93 crore ($1.5 million) for each unit purchase. Depending on the specifications of the equipment, an MOCVD machine can cost about Rs.20.32 crore ($4.4 million).

Taiwan-based Formosa Epitaxy has been quick to take advantage of this measure. The company has partnered with Unity and AmTRAN, and South Korea's LG to establish a Rs.692.66 crore ($150 million) LED epitaxy manufacturing facility in the mainland China city. Jiangsu Canyang Corp. is expected to have a monthly output reaching 1 billion LED chips once it becomes fully operational in May. The chips will be used largely as backlights for LCD panels.

Other local governments are implementing similar strategies as well. After the National Development and Reform Commission announced the latest industrial guidelines in October 2009, various city officials have increased their efforts to support growth in the LED sector. Shenzhen in Guangdong province will be setting aside Rs.67.42 crore ($14.6 million) each year from 2009 to 2011 to help spur the industry's development in the city.

Shanghai's Putuo district, meanwhile, doled out Rs.265.52 crore ($57.5 million) to the high-tech industry special fund for 2010.

Cree in the US and OSRAM from Germany are building LED production facilities in Huizhou and Foshan, both in Guangdong.

Epistar is taking the same route as well. The Taiwan-based chipmaker is cooperating with LED packaging house Lite-On and a mainland-based home appliances supplier to set up a Rs.554.12 crore ($120 million) factory in Changzhou, Jiangsu. It also formed a joint-venture company with UMC and invested in a Rs.73.88 crore ($16 million) LED factory in Shandong province.

Published with permission from Electronic Components. Read full article here.





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